"The rate should have stayed at 170 percent for some time to allow the market to adjust to it," said Avtobank treasurer Vladimir Rashevsky.
"I don't like this," said Mezhekonomsberbank treasurer Andrei Kopylov. "The latest rate cut is artificial, it makes the market nervous and introduces chaos in interbank credit rates."
The Central Bank has been cutting the refinancing rate in stages from April when the rate stood at 210 percent. The cuts follow lower bank credit rates and a fall in monthly inflation to 8.1 percent in May from 22 percent in January.
The last rate cut to 170 percent from 185 percent was last week.
"Banks have been put in a difficult position," said Vladimir Rayevsky, the vice-president of Neftekhimbank. "The Central Bank creates the same difficulties for banks cutting the rate all the time as it did when the rate was constantly being raised."
A senior Central Bank official defended the bank's move.
"The Central Bank is introducing stability by showing that it is sticking to its policy and that the downward (rate) trend continue," the official said.
Central Bank Chairman Viktor Gerashchenko, who wants to reduce the cost of borrowing for state industries, has said the refinancing rate may be lowered to 110 percent by the end of 1994.
But bankers say previous rate cuts have had little effect on the economy, since many Russian banks shy away from corporate lending and prefer short-term transactions on the money market.
The Central Bank has promised to keep rates five percentage points above average interbank credit rates. Three month credit rates are now 150 percent.
But bankers admitted that the rate cuts were necessary for Russia's ailing industry and as a sign of stability.
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